Presented by: Charlie Kelly, Sr. Director Remedy Consulting
What is a Core Vendor Selection? Ten Steps to a Successful Systems Selection Negotiating your Best Rate Project Timing and Contract Dates Wrap up and Q&A 3
Core Vendor Hosted FIS Internally Hosted: JHA Core Systems Fiserv COLD/Image ECommerce Repository CSI Core-Vendor Hosted: Cardinal/ Mobile Banking Management Shazam Statement Reports/Data Processing Warehouse COCC Debit/Credit Best-of Breed Item solutions Processing/Fed Submittal Commercial Loans 5
High Satisfaction (HS/HP) (HS/LP) Lukewarm- would Least likely to de- like price convert reductions (LS/LP) Lukewarm- (LS/HP) Vendor may be Most likely to de- stifling FI growth convert Low Satisfaction High Price Low Price 7
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1. Define the gaps 2. Decide who/how decision will be made 3. Provide RFP info/receive demonstrations 4. Quantify and make a decision 9
Sr. Management Power Users Decide upfront how decision will be made Establish high level project dates Form sub-committees of functional individuals to assist with RFP 11
Think of this as a gap analysis: ◦ Likes-current vendor ◦ Dislikes-current vendor ◦ Where can we be more efficient? ◦ New product must-haves 13
Decide, prior to RFP, what the scoring criteria will be. Survey the Systems Selection Committee and see what is important to them Your ultimate goal is to come up with a score for each vendor invited to bid. 14
Category Description Weight If the Vendor does not offer a product, integration options to 3 rd party products. • Integration and 40% • Willingness to offer a third Party’s products. Flexibility • Real Time integration vs. Batch integration. • Workflow necessary to complete daily functions Functionality/ 5% • Robustness of Vendor’s current offering Ease of Use • User’s perception of Product Roadmap- future deliverables • Reinvestment and history of delivering on Product Roadmap Stability/ • Ability to Implement/Convert 5% • Responsiveness of Account Executive Support • Positive or Negative impact on Client’s customers. Architecture • Underlying infrastructure, network, technical platforms 30% • Ability for Client to write to API’s for third party offerings • Integration of Vendor’s Ancillary systems • Ability of Vendor to support and improve upon the current Architecture • Remedy Financial model Price 20% • Cost/Benefit of more robust offerings • Cost/Benefit of improved Support • Ease of use in understanding Price 15
Request for Proposals should have four strong elements: ◦ A clear definition on required vs. optional product ◦ Volume information on all elements needed for each vendor to come back with a common pricing proposal ◦ Technical /functional questions ◦ Specific SLA/support questions 16
Only add questions that will differentiate the vendors, such as: ◦ Which products are yours vs. a third parties? ◦ How is support handled for third party products? ◦ Define any elements (hardware, volume related, etc.) of your proposal that may cause us additional expense. ◦ What are the network bandwidth requirements? If the question will not help you differentiate between vendors, don’t put the question in the RFP. Error on the side of fewer, more succinct questions. 17
How many people support product development? What is your firm’s annual revenue? Please put your financial proposal in the following format… Describe your implementations process How do you charge for add-on product? Define your teller workflow 18
Decide early which vendors you send the RFP out to, and then which will get a chance to demo. For every vendor, your entire team will need to: ◦ Review every response ◦ Sit through a 1-1.5 days of demo from each invitee ◦ Develop follow up questions 3-4 vendors is optimal Teams can not differentiate with too many choices 19
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Try to even the playing field: ◦ Demos limited to 1 day per vendor ◦ All vendors get the same format, same amount of time to demo ◦ All demos in the same week ◦ Make sure that demonstrators define which products are on your “required” product list vs. optional bells and whistles 21
Functional teams should come prepared with any questions that were not answered during the RFP. Assign a note taker/follow-up person from the functional committees. Re-survey the committee to rank the vendors. Start discussions on implementations and risk 22
Lay out all (3?) bids side-by-side Build your own model- don’t rely on vendor material Anticipate ~ 200 hours worth of modeling work for your financial team Even the playing field financially: ◦ Separate IH from outsourced components ◦ Separate “required” vs. “optional” components ◦ Look for missing elements in each proposal 23
Review in a meeting with all decision makers: ◦ Survey results- product and tech gap analysis ◦ Define your ranking system ◦ Show score of each vendor ◦ Side-by-side financial models ◦ Implementation staffing and risks Try to walk out with a vendor decision 24
Your three proposals should give you a feel for the differences in price structure Consider outsourcing the negotiation. Understand how consultants can charge: ◦ Percentage of savings consultants ◦ Flat Rate consultants ◦ Offload all modeling work Don’t forget important terms and conditions 25
Per Unit Rate- By Client Size $1.400 $1.200 $1.000 XYZ Bank $0.800 $0.600 $0.400 $0.200 ABC Bank $0.000 $100M $200M $300M $400M $500M $600M $700M $800M $1B $1.1B 26
You should have analyzed earlier whether you had the right bodies available for the implementation/conversion Consultants will also have PM help, if necessary Anticipate a 6-9 month cycle 27
Vendor Selection Framework Technology/ RFP Vendor Contract Implementation Business Needs Selection Negotiation Assessment Tasks 1. Gap analysis 1. Create 1. Compile 1. Develop 1. Smooth and and customized RFP issues list timely recommendat RFP clearly responses 2. Develop conversion ions defining your 2. Develop negotiation 2. Mitigate risk 2. Strategy unique needs financial strategy and member assessment 2. Prepare and models 3. Update impact 3. Identity deliver RFP 3. Assist in financial 3. Develop improvement 3. Vendor vendor due models with conversion plan opportunities review diligence new pricing 4. Participate in 4. Determine sessions 4. Facilitate 4. Terms and test planning functional 4. Field all selection conditions 5. Ongoing project requirements vendor decision discussions oversight 5. Confirm questions as 5. Negotiate 6. Slipping task vendors to they with vendor analysis evaluate complete 7. Post-conversion RFP assistance response Typical 2-3 months 1-2 months 2-3 months 2-4 months 9-18 months Time- frame 28
It has been mathematically proven that organizations are most efficient when people are promoted randomly. 29
Two important questions in deciding when to start your core selection process:
Vendor Vendor Contract Implementation Selection Negotiation Schedule 2-4 months 4-5 months 10-14 months Terms and Conditions If RFP is included 18-24 Months 32
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• Systems Selections • Core Contract Negotiations • Conversions- Project Management • Technology Assessments • Migration Analysis -IH vs Outsource
Charlie Kelly C: 312-270-3490 CKelly@RemedyConsult.net
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